Following the National Bureau of Statistics (NBS)’s inflation report showing that it decelerated by 0.38 per cent in September from 17.01 per cent in August to 16.63 per cent, the organised private sector (OPS) has admitted that the steady marginal deceleration over the past few months is noteworthy, only that inflationary pressures remain a key concern in the Nigerian economy, both for businesses and the citizens. With this, the OPS is recommending that for government to tame the current pressure, it needs to reform the foreign exchange market to stabilise the exchange rate and reduce volatility, address forex liquidity issues through appropriate policy measures, address the security concerns causing disruption to agricultural activities and also address the challenge of high transportation cost currently in the country.
A key member of OPS, the Centre for the Promotion of Private Enterprise (CPPE), disclosed that, no doubt, the negative impacts of the headline inflation could be seen openly in the living standard of the common man in Nigeria. The immediate past Director- General of the Lagos Chamber of Commerce and industry (LCCI) and the Founder/Chief Executive Officer, Centre for the Promotion of Private Enterprise, Dr. Muda Yusuf, said that despite the marginal deceleration in the country’s headline inflation in recent times, the month-on-month basis still showed further increase of 1.15 per cent between August and September. Yusuf explained that food inflation, which is the biggest worry for the poor, decelerated by 0.73 per cent from 20.3 per cent in August to 19.57 per cent in September. He said but on a monthon- month basis, there was an increase of 1.26 per cent between August and September.
He noted that the core inflation, which related largely to non-agricultural products, maintained an upward trend. It accelerated by 13.74 per cent in September as against 13.41 per cent in August, an increase of 1.24 per cent. To him, this was largely a reflection of the impact of the further depreciation in the naira exchange rate. Speaking on the headline inflation implications, the former LCCI DG said: “Although the economy witnessed an incremental deceleration in inflation over the last couple of months, high inflationary pressures remain a major concern to stakeholders in the Nigeria economy.
“Some of the implications are escalation of production and operating costs for businesses, leading to erosion of profit margins, drop in sales, decline in turnover and weak manufacturing capacity utilisation, high food prices, which impacts adversely on citizens welfare and aggravates poverty, weak purchasing power, which poses significant risk to business sustainability and price volatility, which undermines investor confidence.” Sspeaking further on the solution, the CPPE founder added that government should reduce fiscal deficit monetisation to minimise incidence of high-powered money in the economy, manage climate change consequences to reduce flooding and desertification, ensure the restoration of normalcy and good order at the nations ports to reduce transaction costs, reduce import duty on intermediate products and raw materials for industries to reduce production costs, especially in the light of the sharp depreciation in the exchange rate, address concerns around high energy cost, and create an investment friendly tax environment.